The US Economy 1970-1970

“For example, the federal government regulates the quality of food and water, the safety of workplaces and airspaces, and the integrity of the banking and finance system.” (Bianco, Canon 2011, p 582) Regulations find out if the product is a market failure. There are two types of regulations, which are economic and social. “Economic regulations sets prices or conditions on entry of firms into an industry, where as social regulation address issues of quality and safety.” (Bianco, Canon 2011, p 582) Economic regulations are concerned with the price regulation of monopolies.

business and causing many workers to lose jobs. In this paper I will point out

There are multiple conditions that occurred in the US that aided in the economic downturn leading to the Great Depression. Prior to the stock market crash of 1929, a classical approach, advocated by Adam Smith, was how America felt its political and economic system functioned. Adam Smith’s classical approach is embedded in the concept of a laissez-faire economic market, which suggests that the US would thrive if left alone (lecture). This approach requires a noninterfering government and allows individuals to follow their own self-interest, which was supposed to keep economic order (Cochran & Malone). Additionally, as discussed in lecture, this theory assumes that markets are inherently stable, self-adjusting and self-regulating, and

Even though the federal government is the main source of promotion and regulation of industry in America, regulation almost inescapably obstructs success

In this essay I will discuss a few terms and how their relationships apply between regulation and market structures, as well as how regulation policies affect the market.

War, corruption, scandal, sounds like the theme for a movie. Actually it describes the atmosphere of our country during the 1970’s. The decade of the 1970’s was a decade filled with political, social, and environmental issues that have had a lasting impact on America today. Some of the issues that affected our country in the first half of the 1970’s carried over from the decade before. One of the first notable events was the Kent State massacre. The year was 1970 and President Richard Nixon stated in a television speech that the United States had invaded Cambodia. Nixon told the American people the invasion was a defensive response to the aggression of the North Vietnamese in Cambodia. He stated that this action would speed up the

The federal regulation is pervasive. If congress has occupied the field by regulating a subject in great breadth and/or in considerable detail, such action by Congress may suggest an intent to displace state regulation of the subject.

The first antitrust law passed by Congress was the Sherman Act, in 1890. In 1914, Congress passed two other antitrust laws: The Federal Trade Commission Act, which created the Federal Trade Commission, and the Clayton Act. With some revisions, these are the most important federal antitrust laws still in effect today. Section 7 of the Clayton Act prohibits mergers and acquisitions when the effect "may be substantially to lessen competition, or to tend to create a monopoly." (ftc.gov) The antitrust laws proscribe unlawful mergers and business practices in general terms, leaving courts to decide which ones are illegal based on the facts of each case. For over 100 years, the antitrust laws have had the same basic objective: to protect the process of competition for the benefit of consumers, making sure there are strong incentives for businesses to operate efficiently, keep prices down, and keep quality up. The enforcement authorities of the federal antitrust laws are The Federal Trade Commission and the U.S. Department of Justice (DOJ) Antitrust Division (ftc.gov).

This great nation’s economy is powered by the almighty power of capitalism. We are number one when it comes to the size and importance of our budget (US Economy). Ipso Facto during the United States’ prime, many countries wanted to emulate the United States due to their extraordinary financial standing compared to the rest of the World (McBride). This want to push towards United States levels of success has caused many countries to shift to a more capitalistic way of thinking. Capitalism is “a system in which goods and services are offered on the free market, with buyers and sellers coming together to determine the price of those goods and services” (US Economy). During the 1920’s, the amount of

Periods of History that Shaped Modern America: Free Market Economies in the 1910’s and 1920’s. An economy develops over a long period of time. It is also shaped by the previous events and developments which inform the locals, policy makers and the governance of a given community regarding economic struggles that need to be addressed. Economic policy and market system processes are continuous and they borrow a lot from historical events where nations aim for formulation and adoption of favorable economic systems.

Free markets have often been idealized in the US, and have become a dominant tool for trade and distribution of goods and services. There have been multiple waves of government regulation and deregulation of the market in US history. Each of these trends have been grappling with the central question of how sufficient markets are at satisfying our goals. In theory, free markets are fair and efficient at distributing goods and services. In reality, however, government must intervene in the marketplace for two overarching reasons. First, because in practice free markets left to themselves are not always fair and efficient. And second, because fairness and efficiency are not our only goals and

The United States is currently experiencing a slow recovery from the recession of 2008-09. The current unemployment rate is 7.7%, which is the lowest level since December of 2008 (BLS, 2012). However, this rate is believed to higher than the rate that would occur if the economy was operating at peak efficiency, and it is also believed that there are structural issues still underpinning this performance. For example, the number of Americans who have exited the work force as the result of prolonged unemployment is believed to be higher than usual. In addition, the Congressional Budget Office (CBO, 2012) notes that long-term unemployment of greater than 26 weeks is at a much higher rate than normal, which will have adverse long-run effects on the economy, since workers with long-term unemployment often find their career paths derailed.

Oligopoly Behavior in the Airline Industry. Case Analysis This case illustrates the pricing behavior of firms that are oligopoly whose market is characterized by the relative few participating firms offering differentiated or standardized products or services. Such firms in an oligopoly have market power derived from barriers of entry that wards off potential participants. As seen in the case, it is clear that because there are a small number of US Airlines firms competing with each other, their behavior is mutually interdependent – thus, the strategies and decisions by one airline management affect managements of the other airlines whose subsequent decisions then affect the first airline. In the airline industry, such oligopolistic

3,4- The Airline industry and the market The airline industry is large, specially in the United States, mainly due to the “ Deregulation” of the industry. In 1938, the Civil Aeronautics Board was created to control the growth of the air transportation industry. This board had the authority to control entry, exit, prices and methods of competition. In the late 1970 this structure was found inefficient and in 1978 deregulation took place. Due to the deregulation of the industry competition intensified, prices dropped, and the number of people travelling increased. Many new companies emerged and regional airlines saw deregulation as an opportunity to expand. Due to the rise in competition, by 1986 mergers started to take place and in 1987 64.8% of the market was controlled by the four largest airlines. The demand for air travel is determined mainly by price, studies revealed that half of the leisure travellers and on quarter of business travellers did not have a preference for a particular airline, which means that prices determined the

1. Deregulation of the US airline industry in 1978 ushered in competition in the hitherto protected industry. Several low-cost, low-fare operators entered the competitive market after the deregulation.